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HMRC internal manual

Inheritance Tax Manual

The District Valuer: Extent of agricultural property in the estate

Before referring the papers to the DV you will have identified the total extent of the agricultural property (IHTM24030) in the estate. This is important because the extent of the agricultural property will have an effect on the question of whether any farmhouses, cottages or farm buildings are ‘of a character appropriate’ (IHTM24050) to the agricultural land. The agricultural property in the estate may include property at other entries in which the deceased has a beneficial interest. (IHTM04031) It may also include qualifying agricultural property on which spouse or civil partner exemption (IHTM11032) is claimed but which nevertheless can be taken account of if the question of character appropriate is in point.

Where the IHT charge arises under IHTA84/S52 you should seek advice as necessary.

You need to advise the DV of all the agricultural property to which the deceased/transferor was entitled as at the date of death. For this purpose ‘property’ includes rights and interests of any description, and ‘land’ includes any estate, interest, easement, servitude or right in or over land.

You should include details of:

  • land in hand,
  • land subject to grazing and/or mowing licences, (IHTM24073)
  • any annual agricultural tenancies (IHTM24210) held by the deceased or transferor, including those to a sole tenant,
  • land farmed under a farm business tenancy, (IHTM24240)
  • land let away to a third party, whether under a farm business tenancy (IHTM24240) or an annual agricultural tenancy (IHTM24210) (but see IHTM24163)
  • grazing rights (but not grazing or mowing licences held by the deceased/transferor as these are not interests in property),
  • interests in land held as an underlying asset of a company, provided the deceased or transferor was the controlling shareholder, and
  • land held as underlying assets of a partnership of which the deceased/transferor was a partner.
  • land not owned by the deceased but subject to the rights of a partnership of which the deceased/transferor was a member, where the partnership’s interest amounts to a protected tenancy or a farm business tenancy (IHTM24240). Where the interest amounts to less you should seek the advice of Technical.

In every case you should send a copy of a plan of the land to the District Valuer.